Apr 28 - McClatchy-Tribune Regional News - Colin Campbell The Smithfield Herald, N.C.



Cold temperatures this winter have forced Cynthia Price to pinch pennies.

She lives in a small, aging mobile home in East Smithfield, yet she had one utility bill this winter that hit $599.

"It's tight for us every month," Price said. "It's a struggle every month."

Price says she doesn't heat the place much and doesn't do much cooking, but still her bills are double what she paid living in a bigger household in Fayetteville.

 "You would think I had a small factory going here," she said. "We're not extravagant people."

Price and her neighbors pay much higher electric rates than most North Carolinians. That's because Smithfield owns and operates its own electric system, as do three other Johnston County towns, Benson, Clayton and Selma. Other Johnston County residents buy their power from much cheaper Progress Energy, a private utility company.

Locked into contracts until 2026, officials in the county's four public power towns say they can do little about the high costs aside from encouraging conservation. But a closer inspection of their budgets shows that the towns rountinely use profits from electricity sales to fund programs and services that have little or nothing to do with electricity.

Where the money goes

Ask local officials about the high rates and they'll give you the full history of the towns' electric contracts.

Back in the 1970s, power looked to be in short supply, so a number of towns banded together to buy a share of the soon-to-be-built Shearon Harris nuclear plant. "At the time, it was a good decision," said Smithfield utilities director Earl Botkin.

But then regulation prompted by the Three Mile Island nuclear disaster caused construction costs to skyrocket, and that put the towns billions of dollars in debt. Those debt payments, folded into every power bill, won't end until 2026.

The debt does account for the bulk of the difference between town rates and Progress Energy rates, but the towns aren't completely powerless when it comes to deciding how much folks pay.

In Benson, electric profits cover the town's annual donations to groups like the Johnston County Arts Council, Day by Day Treatment Center and the American Red Cross.

"The donations have always been done through the electric fund," Town Manager Keith Langdon said.

Also in Benson, electricity revenues pay a portion of 13 employees' salaries. One of them, downtown development coordinator Ben Murphrey, would seem to have little connection to utility services.

But Langdon said that by recruiting business, Murphrey helps drum up customers for the town's utilities. "There's more available funds [in electric] to help fund it than there would be in the general fund," he said.

Benson and Clayton also "tax" their electric systems, just as other towns exact taxes or franchise fees from private utilities. The electric budgets in Benson and Clayton include a "payment in lieu of taxes" that supports unspecified, non-electric town projects.

Public power towns in Johnston also take money from their electric funds to cover administrative and support services. That amount ranges from about $200,000 in Selma to $1 million in Smithfield and Clayton.

Finance directors in Smithfield and Clayton said that $1 million covers things like liability insurance and portions of salaries for officials overseeing the utility.

In addition to power-plant debt, town power customers are also paying off electric system upgrades through their bills. That ranges from $300,000 a year in Selma to cover a substation serving Sysco to $425,000 in Clayton for system expansion and equipment.

Not everyone pays

While most folks living in the four towns pay the towns' higher electricity rates, some households and businesses enjoy Progress Energy's lower rates.

In each public power town, many newly annexed neighborhoods aren't on the town's electric grid. In Smithfield, that includes a big chunk of town -- everyone on the west side of the Neuse River is served by Progress Energy.

Meanwhile, the towns allow new businesses on their outskirts to choose Progress energy. In Smithfield, for example, many of the new restaurants and hotels along Industrial Park Drive are Progress Energy customers. The much older outlet center is a town customer. Botkin, Smithfield's utility director, said Industrial Park Drive was a "gray area" between Progress lines and town lines.

That discrepancy strikes some town power customers as unfair, and they'd like to see more of the towns' expenses and debts paid for out of property taxes.

"That would make more sense," said Price, the East Smithfield resident. "I shouldn't be paying these high rates because of decisions you made years ago."

The higher electricity rates can make it harder to sell houses in the public power towns. Denise Pilkington of Century 21 Suburban Real Estate said she's had clients choose Progress-served homes over similar houses in town. And potential town-power customers sometimes request a house's utility bills before deciding whether to buy.

But several elected officials in the public power towns said they were hesitant to raise taxes to lower utility bills. They added that they're always looking out for ways to lower electric rates. Also, each town offers extensions ranging from a week to a month for customers who have trouble paying, and hundreds have gotten those reprieves this winter.

"If there's any savings, I'm going to recommend that it goes straight to the customer," Smithfield Mayor Daniel Evans said.

colin.campbell@nando.com or 919-836-5768

(c) 2010, McClatchy-Tribune Information Services  To subscribe or visit go to:  www.mcclatchy.com/